BLAW -2150-001 Chapter 3

Social Media (1 of 2)

-Advancements in technology have created various new ethical issues for companies. Here, we focus on those involving social media. Most people think of social media—Facebook, Flickr, Instagram, Snapchat, Tumblr, Twitter, Pinterest, WhatsApp, LinkedIn, and the like—as simply ways to communicate rapidly. But everyone knows that they can quickly encounter ethical and legal disputes for posting statements that others interpret as harassing, inappropriate, insulting, or racist. Businesses often face ethical issues with respect to these social media platforms. The Use of Social Media To Make Hiring Decisions: -In the past, to learn about a prospective employee, an employer would ask the candidate's former employers for references. Today, employers are likely to also conduct Internet searches to discover what job candidates have posted on their Facebook pages, blogs, and tweets. -On the one hand, job candidates may be judged by what they post on social media. On the other hand, though, they may be judged because they do not participate in social media. Given that the vast majority of younger people use social media, some employers have decided that the failure to do so raises a red flag. In either case, many people believe that judging job candidates based on what they do outside the work environment is unethical. The use of social media to discuss work-related issues: -Because so many Americans use social media daily, they often discuss work-related issues there. Numerous companies have strict guidelines about what is appropriate and inappropriate for employees to say when posting on their own or others' social media accounts. A number of companies have fired employees for such activities as criticizing other employees or managers through social media outlets. Until recently, such disciplinary measures were considered ethical and legal. The responsibility of employers: A ruling by the National Labor Relations Board (NLRB—the federal agency that investigates unfair labor practices) has changed the legality of such actions.

Outsourcing

-Ethical problems involving outsourcing most often arise when global companies outsource work to other countries in an attempt to save on labor costs. This type of outsourcing elicits an almost automatic negative reaction in the U.S. public. Some people feel that companies should protect American jobs above all else. -Ethical questions often arise as to the employment practices of the foreign companies to which the work is outsourced. -Covers a wide spectrum of ethical gray areas and is not always clearly unethical. -Outsourcing domestically,—such as when companies hire outside firms to transport goods—generally does not raise ethical issues.

World Religions, Cultural Norms, and Ethics

-Global businesses need to be conscious of the impact of different religious principles and cultural norms on ethics. For instance, in certain countries the consumption of alcohol is forbidden for religious reasons. It would be considered unethical for a U.S. business to produce alcohol in those countries and employ local workers to assist in alcohol production. -In other countries, women may not be treated as equals because of cultural norms or religion. In contrast, discrimination against employees on the basis of sex (or race, national origin, age, or disability) is prohibited in the United States. The varying roles of women can give rise to ethical issues regarding how women working for a U.S. company should dress or behave in certain regions of the world. -How far should companies go to cater to business partners in other nations? Going too far to please clients in another country can alienate a firm's employees and domestic customers and generate bad press. Decision makers in charge of global business operations should consider these ethical issues and make some decisions from the outset.

The Relationship of Law and Ethics (2 of 4)

After the Enron debacle occurred, where a major energy company that engaged in risky financial maneuvers resulting in shareholders losing billions of dollars, Congress responded by enacting the Sarbanes Oxley Act or SOX. SOX is intended to help reduce corporate fraud and unethical management decisions by setting p accountability measures for publicly traded companies. Companies also have to establish systems for employees (and others) to confidentially report suspected illegal (or unethical) auditing or accounting practices. Gray areas: in these situations, companies should act honestly and responsibly under the circumstances, in order to have a defense against allegations of misconduct. When legislatures draft laws, they typically use broad language so that the provisions will apply in a variety of circumstances. It can be hard to determine how such broad provisions apply to specific situations. In addition, laws intended to address one situation may apply to other situations as well. And the legislative body that passes a law may not give clear guidance on the purpose of the law or the definition of terms in the law. Other issues arise because laws are created through the political process. They therefore often involve compromises among competing interests and industries. As a result, a law's provisions may be ambiguous, may be weaker than intended by the original drafters, or may lack a means of enforcement. In short, the law is not always clear, and these "gray areas" in the law make it difficult to predict with certainty how a court will apply a given law to a particular action. -The government has institutionalized some ethical rights and duties through the passage of laws and regulations. Many laws are designed to prevent fraudulent (misleading, deceptive) conduct in various contexts, including contracts, health care, financial reporting, mortgages, and sales. -Failure to meet the moral minimum can have significant consequences, especially in the context of litigation. A businessperson who fails to respond to a lawsuit can be held liable. -Businesspersons must remember that an action that is legal is not necessarily ethical.

The Importance of Ethical Leadership (2 of 3)

Case Example 3.5 In re Morgan Stanley Smith Barney, LLC, Docket No. E-2016-0055. www.sec.state.ma.us. 10 April 2017. Web.: The financial firm Morgan Stanley Smith Barney, LLC, has an internal policy barring sales contests. Nevertheless, Morgan Stanley branches in Massachusetts and Rhode Island held a sales contest in which brokers were given cash incentives of up to $5,000 for selling securities-based loans, or SBLs (loans that allow clients to borrow against their investments). Thirty financial advisers participated in the sales contest for almost a year until Morgan Stanley's compliance office noticed and halted the practice. One regional branch reportedly tripled its loans as a result of the contest. Eventually, Morgan Stanley paid a $1 million fine to the state of Massachusetts for, among other things, violating state securities rules and "failing to observe high standards of commercial honor." Summary: Morgan Stanley Smith Barney, LLC has an internal policy barring sales contexts. However, its branches in Massachusetts and Rhode Island held a sales contest in which brokers were given case incentives of up to $5,000 for selling securities-based loans. The company's compliance office did not find this out until almost a year later, and then halted this practice upon discovering it.

The Importance of Ethical Leadership (3 of 3)

Case Example 3.6 Maddox v. Olshan Foundation Repair and Waterproofing Co. of Nashville, L.P., 2019 WL 4464816 (Tenn. Ct. App. 2019).: Rachel Maddox purchased a home on a hillside in Nashville. After heavy rains, Maddox noticed cracks in the basement. She also noticed that if a tennis ball was placed on the floor, it would roll toward the front of the house. Maddox contacted Olshan Foundation Repair and Waterproofing Co., who sent Kevin Hayman to inspect her property. Hayman—described on work orders as a "certified structural technician"—suggested $27,000 of repairs. Maddox agreed, in part because of Olshan's promise of a lifetime warranty. Several years later, further rain caused new cracks in the foundation of the house, which had again begun to tilt. After several unsuccessful attempts to correct these problems, Olshan employees stopped coming to the property or returning Maddox's calls. An independent engineer told Maddox that Olshan's "repairs" had made the house foundation issues worse. Eventually, a local building inspector noted that the house appeared to be "sliding off the hill" and was unsafe for inhabitation. Maddox sued Olshan for fraud. At trial, a company executive admitted that Hayman's "certification" was based on a three-week course administered by the company. The court awarded Maddox $187,000 for the fair market value of her home, plus $15,000 in punitive damages because of Olshan's egregiously unethical behavior. This judgment was affirmed on appeal. Summary: Business owners and managers can sometimes foster unethical and illegal conduct, which results in negative consequences for their businesses. In this case example, a homeowner was awarded the fair market value for her home ($187,000), plus $15,000 in punitive damages because a foundation repair and waterproofing company sent a "certified structural technician" who made a lifetime warranty on $27,000 of suggested repairs. Years later, rain caused cracks in the house's foundation and the house ended up being deemed unsafe to inhabit. The homeowner sued the company for fraud and won, with the judgment being affirmed on appeal.

The Relationship of Law and Ethics (4 of 4)

Example 3.4: Google's code of conduct starts with the motto "Don't be evil." The code then makes general statements about how Google promotes integrity, mutual respect, and the highest standard of ethical business conduct. Google's code also provides specific rules on a number of issues, such as privacy, drugs and alcohol, conflicts of interest, co-worker relationships, and confidentiality—it even includes a dog policy. The company takes a stand against employment discrimination that goes further than the law requires. It prohibits discrimination based on sexual orientation, gender identity or expression, and veteran status.

Al-Dabagh v. Case Western Reserve University (2015)

Medical School at Case Western Reserve University was within its contractual rights to decide that a student lacked the professionalism required to graduate from the school. United States Court of Appeals, Sixth Circuit, 777 F.3d 355 (2015). Case notes: University had nine core competencies, including professionalism in addition to "ethical, honest, responsible, and reliable behavior." Medical student Al-Dabagh did well academically but sexually harassed classmates, asked instructor not to mark him late for class, received complaints from hospital staff about his demeanor, and was convicted of driving while intoxicated. University had Committee on Students that unanimously voted against certifying Al-Dabagh for graduation. He sued the University for breach of good faith and fair dealing, and won at the district court level. The Sixth Circuit reversed this decision on appeal. Decision: The U.S. Court of Appeals for the Sixth Circuit reversed the lower court's order to issue a diploma. The appellate court found nothing to indicate that Case Western had "impermissible motives," acted in bad faith, or dealt unfairly with Al-Dabagh. Reason: The Committee on Students' refusal to approve Al-Dabagh for graduation was an academic judgment. The court explained that it would overturn such a decision only if it substantially departed from accepted academic norms. There was nothing to indicate that such a departure occurred in Al-Dabagh's case.

Awareness

Regardless of the context in which a decision is called for, sometimes businesspersons are not even aware that the decision has ethical implications. Perhaps they are focused on something else, for instance, or perhaps they do not take the time to think through their actions. Case Example 3.17: In re Takata Airbag Products Liability Litigation, 255 F.Supp.3d 1241 (2017).: Japanese airbag maker Takata Corporation manufactured some airbags that used an ammonium nitrate-based propellant without a chemical drying agent. It was later discovered that these airbags tended to deploy explosively, especially in higher temperatures, higher humidity, and older vehicles. When the airbags deployed, metal inflator cartridges inside them sometimes ruptured, sending metal shards into the passenger cabin. By the beginning of 2017, these defective airbags had caused 11 deaths and 180 injuries in the United States. The federal government ordered recalls of the devices in nearly 42 million vehicles nationwide. Takata executives likely did not intend to hurt consumers and may not even have considered the ethics of their decision. Takata, however, continued to produce airbags with this defect for years. The company, which declared bankruptcy, agreed to pay $1 billion in fines and restitution and another $650 million to settle a class-action lawsuit that resulted from its actions.

Social media (2 of 2)

The Responsibility of Employees: -While most of the discussion in this chapter concerns the ethics of business management, employee ethics is also an important issue. For instance, is it ethical for employees to make negative posts in social media about other employees or, more commonly, about managers? After all, negative comments about managers reflect badly on those managers, who often are reluctant to respond via social media to such criticism. Disgruntled employees may exaggerate the negative qualities of managers whom they do not like. -Some may consider the decision by the National Labor Relations Board to be too lenient toward employees and too stringent toward management. There is likely to be an ongoing debate about how to balance employees' right to free expression against employers' right to prevent the spreading of inaccurate negative statements online.

Ethics and the Role of Business

What is Ethics? •The study of right and wrong behavior. •A branch of philosophy focused on moral principles and values applied to social behavior. •It involves fairness, justness, and rightness or wrongness of an action. Business Ethics •The application of moral and ethical principles in a business context.

Chapter 3 Vocabulary

business ethics-The application of moral principles and values in a business context. categorical imperative-An ethical guideline developed by Immanuel Kant under which an action is evaluated in terms of what would happen if everybody else in the same situation, or category, acted the same way. corporate social responsibility (CSR)-The idea that corporations can and should act ethically and be accountable to society for their actions. cost-benefit analysis-A decision-making technique that involves weighing the costs of a given action against the benefits of that action. duty-based ethics-An ethical philosophy rooted in the idea that every person (and every business) has certain duties to others, including both humans and the planet. ethical reasoning-A reasoning process in which individuals link their moral convictions or ethical standards to the situation at hand. ethics-Moral principles and values applied to social behavior. moral minimum-The minimum level of ethical behavior expected by society, which is usually defined as compliance with the law. outcome-based ethics-An ethical philosophy that focuses on the consequences of any given action in order to maximize benefits and minimize harms. outsourcing-The practice by which a company hires an outside firm or individual to perform work rather than hiring employees to do it. principle of rights-The belief that human beings have certain fundamental rights. stakeholders-Groups that are affected by corporate decisions. Stakeholders include employees, customers, creditors, suppliers, and the community in which the corporation operates. triple bottom line-A measure that includes a corporation's profits, its impact on people, and its impact on the planet. utilitarianism-An approach to ethical reasoning in which an action is evaluated in terms of its consequences for those whom it will affect. A "good" action is one that results in the greatest good for the greatest number of people.

The Role of Business in Society

•Businesses originally were perceived as pure-profit maximizers. •Corporations now are being expected to participate in society as corporate citizens. •Triple Bottom Line—a corporation's profits, its impact on people, and its impact on the planet. Over the last 200 years, public perception has moved toward expecting corporations to participate in society as corporate citizens. Originally, though, the only perceived duty of a corporation was to maximize profits and generate revenues for its owners. Although many people today may view this idea as greedy or ruthless, the rationale for the profit-maximization theory is still valid. Business as a Pure Profit Maximizer: -In theory, if all firms strictly adhere to the goal of maximizing profits, resources flow to where they are most highly valued by society. -Corporations focus on their strengths. -Those suited for dealing with social problems & perform charitable acts, can specialize in those areas. -The govt, through taxation & other financial allocations, can shift resources to entities that perform public services. -Profit maximization can lead to the most efficient allocation of scarce resources. -Even when profit maximization is the goal, companies benefit by behaving ethically. (Repeat customers through satisfied customers) (Unsatisfied customers go to leave bad reviews). Business as a Corporate Citizen -Dissatisfaction with profit maximization theory led to this. -Investors and others began to look beyond profits and dividends and to consider the triple bottom line—a corporation's profits, its impact on people, and its impact on the planet. -Magazines and websites began to rank companies based on their environmental impacts and their ethical decisions. -Corporations became viewed as "citizens" and were expected to participate in bettering communities & society. A Four-Part Analysis Businesspeople can use these four criteria to help make ethical decisions: -Legal implications of each decision -Public relations impact -Safety risks for consumers and employees -Financial implications -This will assist the firm in making decisions that not only maximize profits but also reflect good corporate citizenship.

Why Do Ethics Matter in Business?

•Businesspersons and corporations face both legal and ethical issues in the course of doing business. •Businesses need to care about impact of unethical behavior on its finances and public perception. •Business ethics looks at business decisions, and whether those are right or wrong. -The goal of business ethics is not to stifle innovation. There is nothing unethical about a company selling an idea or technology that is still being developed. In fact, that's exactly what many successful start-ups do—take a promising idea and develop it into a reality. But businesspersons also need to consider what will happen if new technologies do not work. Do they go ahead with production and sales? What are the ethical problems with putting a product on the market that does not function as advertised? To be sure, there is not always one clear answer to an ethical question. What is clear is that rushing to production and not thinking through the ethical ramifications of decisions can be disastrous for a business.

Corporate Social Responsibility (1 of 2)

•Corporate social responsibility (CSR): The idea that corporations can and should act ethically, and should be accountable to society for their actions, not just their shareholders' best interest. •Socially responsible activities will benefit a corporation, but the benefits may not be seen immediately. At times, the benefit of CSR may not be immediate. It may cost more initially to construct a new plant that meets the high-environmental standards necessary to be certified by the LEED program. LEED stands for Leadership in Energy and Environmental Design. Nevertheless, over the life of the building, the savings in maintenance and utilities may make up for the extra cost of construction. Corporate Social Responsibility: -combines a commitment to good citizenship with a commitment to making ethical decisions, improving society, and minimizing environmental impact. -not imposed on a corporation by law. -relatively new concept in the history of business, but it is a concept that becomes more important every year. -most successful when a company undertakes activities that are significant and related to its business operations. Some types of activities that businesses are practicing today- 1.Environmental efforts, such as using efficient building materials and reducing the size of the firm's carbon footprint. 2.Ethical labor practices, including treating all employees fairly and ethically in international as well as domestic operations. 3.Charitable donations to local and national causes. 4.Volunteering for specific issues and organizations. As an incentive, many companies now pay employees to perform volunteer work. Corporate Aspects of CSR-may see an increase in goodwill from the local community for creating a sports park, for instance. SIDE NOTES- Surveys of college students about to enter the job market confirm that young people are looking for socially responsible employers. Corporations that engage in meaningful social activities retain workers longer, particularly younger ones.

Corporate Social Responsibility (2 of 2)

•Corporations should behave as "good citizens" by promoting worthwhile social goals, and by working together to solve important social problems. •One view of CSR is that corporations have a duty to both their shareholders, and their stakeholders (groups affected by corporate decisions). The Social Aspects of CSR: -has a responsibility to use their wealth and power in socially beneficial ways. -social aspect requires that corporations demonstrate that they are promoting goals that society deems worthwhile and are moving toward solutions to social problems. -Companies may be judged on how much they donate to social causes, as well as how they conduct their operations with respect to employment discrimination, human rights, environmental concerns, and similar issues. -Millennials, in particular, are concerned about corporate social responsibility. -Some corporations publish annual social responsibility reports, which may also be called citizenship or sustainability reports. Stakeholders and CSR: -rationale for this "stakeholder view" is that, in some circumstances, one or more of these groups may have a greater stake in company decisions than the shareholders do. -Stakeholders(its employees, customers, creditors, suppliers, and the community in which it operates. Advocacy groups, such as environmental groups and animal rights groups, may also be stakeholders.) -the stakeholder approach, a corporation considers the impact of its decision on these stakeholders, which helps it to avoid making a decision that may appear unethical and may result in negative publicity. -Difficult aspect of the stakeholder analysis (determining which group's interests should receive greater weight if the interests conflict.)

Duty-Based Ethics (1 of 2)

•Duty-Based Ethics: ethical philosophy rooted in idea that every person has certain duties to others, including humans and planet -Religious ethical principles: beliefs about how one should treat others, typically described in religious texts -Principle of Rights: when deciding whether an action is ethical, one should consider what effect one's actions would have on the fundamental rights of others. Duty-Based Ethics: -Deals with standards for behavior that traditionally were derived from revealed truths, religious authorities, and philosophical reasoning. These standards involve concepts of right and wrong, duties owed, and rights to be protected. -Corporations today often describe these values or duties in their mission statements or strategic plans. -Some company mission statements are based on a religious rationale, some on a nonreligious rationale. Principle of Rights (Rights Theory): -The principle that human beings have certain fundamental rights (to life, freedom, and the pursuit of happiness, for instance) is deeply embedded in Western culture. -Embraces the concept that certain actions (such as killing another person) are morally wrong because they violate the fundamental rights of others. -Believe that a key factor in determining whether a business decision is ethical is how that decision affects the rights of others. (others include the firm's owners, its employees, the consumers of its products or services, its suppliers, the community in which it does business, and society as a whole) Conflicting Rights: -potential dilemma for those who support rights theory is that they may disagree on which rights are most important. Resolving Conflicts:-In general, rights theorists believe that whichever right is stronger in a particular circumstance takes precedence.

The Importance of Ethical Leadership (1 of 3)

•Employees take cues from management in ethics, just like other workplace conduct and attitudes. •Managers who do not commit to creating and maintaining an ethical workplace rarely have one. •Managers must model ethical behavior for their employees, and enforce codes of conduct consistently. •Unrealistic Goals for Employees -Managers should set realistic goals for their employees to reduce the incentive in behaving unethically. •Case example 3.5 - Morgan Stanley Smith Barney, LLC -Fostering of unethical conduct •Case example 3.6 - the "Lifetime Warranty" •-Business owners and managers sometimes take more active roles in fostering unethical and illegal conduct, with negative consequences for their businesses. -Managers setting realistic goals for employees can help curb unethical behavior, if employees are trying to achieve unrealistic production or sales goals. Certain types of behavior on the part of managers and owners contribute to unethical behavior among employees. Managers who set unrealistic production or sales goals increase the probability that employees will act unethically. If a sales quota can be met only through high-pressure, unethical sales tactics, employees will try to act "in the best interest of the company" and behave unethically. Mangers looking the other way tells employees that ethical transgression will be accepted. Note that even when large companies have policies against sales incentives, individual branches may still promote them.

Ethical Principles and Philosophies

•Ethical Reasoning: Reasoning process in which an individual links his or her moral convictions (or ethical standards) to the situation at hand. •Study of ethics is generally divided into two major categories: -Duty-based ethics -Outcome-based ethics As businesses make decisions, they must analyze the alternatives in a variety of ways, one of which is from an ethical perspective. In analyzing alternatives in this way, businesses may take one of two approaches. Most companies have written codes or policies that outline their approach to ethics.

Sources of Ethical Issues in Business Decisions

•Ethical dilemmas often arise in these areas: -Short-term profit maximization at the expense of ethical behavior -Use of social media, especially when making hiring decisions and discussing work-related issues -Lack of awareness of relevant ethical issues -Rationalization of an unethical decision based on the benefits to the individual or the organization -Uncertainty about the best ethical choice -A key to avoiding unethical conduct is to recognize how certain situations may lead individuals to act unethically. Uncertainty:-Practically unavoidable, should be treated as an indicator of a potential ethical problem. -When employees or executives express uncertainty about a particular decision, it is therefore best to treat the situation as involving an ethical issue. -Decision makers should try to identify what the ethical dilemma is and why the individual or group is feeling uneasy. -They should also take the time to think through the decision completely and discuss various options. -They might want to consider whether the company would be pleased if the decision were reported to its clients or to the public. -Building a process that supports and assists those facing ethical dilemmas can be key to avoiding unethical business practices (and any corresponding negative publicity). Rationalization: -Sometimes, businesspersons make a decision that benefits them or their company that they know is ethically questionable. Afterward, they rationalize their bad behavior. -An executive might rationalize that unethical conduct directed against a certain competitor is acceptable because that company deserves it. -Individuals might rationalize that their conduct is simply a part of doing business and is not personal or unethical. -In counteracting rationalization is for businesspersons to first decide the right thing to do on an ethical level before making a business decision. - Then they can figure out how to mitigate the costs of doing the right thing. This works much better to prevent unethical conduct than making decisions based solely on a financial or business basis and then trying to make that result seem ethical (by rationalizing).

Ethical Issues in Business

•Fundamental ethical issues for business: -Developing integrity and trust (those within the company, other businesses, clients & the community) -Ensuring respect for diversity -Enforcing equal opportunity employment and civil rights laws -Complying with several federal and state laws and regulations (environmental, financial reporting, & safety standards) -The most difficult aspect of ethics that businesses face is in decision making, which is the focus of this text. Businesspersons must learn to recognize ethical issues, get the pertinent facts, evaluate the alternatives, and then make a decision. Decision makers should also test and reflect on the outcome of their decisions.

Duty-Based Ethics (2 of 2)

•Kantian Ethical Principles -People should not be treated as a "means to an end" because they are qualitatively different from other physical objects. -Categorical Imperative: when deciding whether an action is ethical, Kant suggested that one should consider what the effect would be if everyone similarly situated acted in the same way What are some examples demonstrating Kantian ethical principles? German Philosopher Immanuel Kant (1724-1804): - identified some general guiding principles for moral behavior based on what he thought to be the fundamental nature of human beings. -believed that human beings are qualitatively different from other physical objects and are endowed with moral integrity and the capacity to reason and conduct their affairs rationally. People Aren't a Means to an End-Kant said that when people are treated merely as a means to an end, they are being treated as the equivalent of objects and are being denied their basic humanity. The Categorial Imperative-when deciding whether an action is ethical, Kant suggested that one should consider what the effect would be if everyone similarly situated acted in the same way.

The Relationship of Law and Ethics (3 of 4)

•Moral Minimum -The minimum level of ethical behavior expected by society—usually defined as compliance with the law. •Case Example 3.3 - Scott v. Carpanzano, 556 Fed. Appx. 288 (5th Cir. 2014). •Actions that are legal is not necessarily ethical. •Many private companies and industry organizations have created Codes of Ethics. -Google's Code of Conduct starts with "Don't be evil." •There are many industry specific ethical codes. Moral minimum means if people and entities merely comply with the law, they're acting at the lowest ethical level society will tolerate (legal compliance equals the minimum). Businesses can and should go beyond that minimum. Case Example 3.3: Plaintiff deposited $2 million in an escrow account maintained by a company owned by Salvatore. Rick Scott deposited $2 million into an escrow account maintained by a company owned by Salvatore Carpanzano. Immediately after the deposit was made, the funds were withdrawn in violation of the escrow agreement. When Scott was unable to recover his money, he filed a suit against Salvatore Carpanzano and others. Salvatore failed to cooperate with discovery and did not respond to attempts to contact him by certified mail, regular mail, and e-mail. He also refused to make an appearance in court and did not finalize a settlement negotiated between the parties' attorneys. The court found that the defendant had intentionally failed to respond to the litigation and issued a judgment for more than $6 million in Scott's favor. On appeal, a federal appellate court affirmed the district court's judgment against Salvatore. Private company code of ethics-Company codes are not laws. Instead, they are rules that the company sets forth and that it can enforce (by terminating an employee who does not follow them, for instance). Codes of conduct typically outline the company's policies on particular issues and indicate how employees are expected to act. Industry Ethical Codes: examples include the American Institute of Certified Public Accountants (AICPA), American Bar Association (ABA), and American Nurses Association (ANA).

Outcome-Based Ethics: Utilitarianism

•Outcome-Based Ethics: focuses on the consequences of an action, not on the nature of the action itself, or on any set of preestablished moral values or religious beliefs •Outcome-based ethics looks at the impacts of a decision in an attempt to maximize benefits and minimize harms. -The premier philosophical theory for outcome-based decision making is utilitarianism, a philosophical theory developed by Jeremy Bentham (1748-1832) and modified by John Stuart Mill (1806-1873)—both British philosophers. "The greatest good for the greatest number" is a paraphrase of the major premise of the utilitarian approach to ethics. •Cost-Benefit Analysis 1.Determination of which individuals will be affected by the action in question. 2.Cost-benefit analysis, involves assessment of negative and positive effects of alternative actions on these individuals. 3.Choice among alternative actions that will produce maximum societal utility (the greatest positive net benefits for the greatest number of individuals). -Under a utilitarian model of ethics, an action is morally correct, or "right," when, among the people it affects, it produces the greatest amount of good for the greatest number (or creates the least amount of harm). When an action affects the majority adversely, it is morally wrong. Applying the utilitarian theory thus requires the following steps: •Problems with the Utilitarianism Approach -An action that produces the greatest good for most people, may not seem to be the most ethical.

The Relationship of Law and Ethics (1 of 4)

•Some ethical rights and duties have been institutionalized through laws and regulations -Case Example 3.1 - Fraud Reduction and Data Analytics Act -Case Example 3.2 - Dodd-Frank Wall Street Reform and Consumer Protection Act -Sarbanes-Oxley Act (SOX) •Gray areas in the law occur when statutes are difficult to interpret and apply Case Example 3.1: Fraud Reduction and Data Analytics Act (2016) - was passed to identify and assess fraud risks in federal government agencies. The purpose is to prevent, detect, and respond to fraud in federal programs. Examples include improper payments. Case Example 3.2: Dodd-Frank Wall Street Reform and Consumer Protection Act - made sweeping changes to the U.S. financial regulatory environment to promote financial stability, and protect consumers from abusive financial service practices. After alleged ethical lapses on Wall Street contributed to a financial crisis, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. Dodd-Frank made sweeping changes to the United States' financial regulatory environment in an attempt to promote financial stability and protect consumers from abusive financial services practices. Similarly, Congress enacted the Sarbanes-Oxley Act (SOX) after Enron, a major energy company, engaged in risky financial maneuvers that resulted in the loss of billions of dollars to shareholders. SOX was designed to help reduce corporate fraud and unethical management decisions by setting up accountability measures for publicly traded companies. Company heads must verify that they have read quarterly and annual reports and vouch for their accuracy. SOX also requires companies to set up confidential systems so that employees and others can "raise red flags" about suspected illegal or unethical auditing and accounting practices. Laws cannot, however, codify all ethical requirements.